CFO Gender and Tax Aggressiveness: New Evidence from China

Abstract

This study investigates whether female CFOs (Chief Finance officers) are more aggressive than male CFOs in tax avoidance using the data of Chinese listed companies from 2009 to 2016. Our results show that the tax aggressiveness of companies with female CFOs is significantly higher than that of companies with male CFOs, which is contrary to the findings of Francis, Hasan, Wu, and Yan (2014) who use S&P500 firms to explore the association between CFO gender and tax avoidance. We conjecture that our results are driven by the fact that Chinese female CFOs are more concerned about career risks than about legal risks, leading to more aggressive tax avoidance activities. We also find that the positive relationship between CFO gender and tax aggressiveness is weaker with legal environment, supporting that female CFOs make tax decisions based on the trade-off between legal risks and career risks. Further evidence shows that CFO pay/age strengthens/weakens the positive relationship between gender and tax avoidance, indicating that female CFOs’ career concerns are related to their ages and salary levels. Finally, CEO gender is not significantly associated with tax aggressiveness, but it strengthens the impact of CFO gender on tax aggressiveness.

Keywords: CFO; gender; tax aggressiveness; risk; career concern

JEL Classification: H26, G01